Deciding how to buy my first investment property

[Ian Barrett]

Hello all, I am looking to buy my first property and would appreciate hearing advice from someone with more experience than me. I am relatively new to real estate but am no longer interested in standing on the sidelines. 

I am currently renting an apartment and have decided to purchase a home within six months after my lease expires. Initially, I wanted to start my real estate investing journey by purchasing a multi-family property and building up; after beginning to read 'Building Wealth One House at a Time,' I'm contemplating if it's better to start my investing journey by purchasing a SFH and scaling my portfolio from there. Should I go through conventional financing, I have about $40k saved to cover the down payment(s) + closing costs. I've also just learned about owner financing & "subject-to" financing and would be interested in using this method for purchasing future rental properties for my portfolio.

My question is: Would it be better to purchase a home to live in to eventually put tenants in & turn it into an investment property? Or would it be better for me to buy a property for myself, then turn my focus to finding properties that are strictly going to be tenant-occupied investment properties?

Thank you in advance for your advice, outlooks, and responses!

[Michael Dumler]

@Ian Barrett, I've probably posted this over a hundred times on the Atlanta forums haha, buy a single-family home with either an in-law suite or finished-out basement/separate unit that you can either source as an LTR or STR via Airbnb. This gives you the "luxury" of house hacking without having to rent the bedrooms separately. We're still experiencing a strong seller's market here, you're going to have a helluva time trying to acquire a seller finance deal. As a real estate agent, I'm biased, however, I do not recommend trying to go with seller financing at this time. Moreover, you can try to acquire a small multifamily property but this too is going to be very difficult. Most ATL small multifamily properties are in B-/C-class neighborhoods that are comprised entirely of small multifamily properties. Furthermore, most of these deals are still receiving offers over asking from aggressive investors who have secure financing lined up. Lastly, as a house hacker, don't expect your home to cash flow abundantly. In my opinion, the concept of house hacking is to simply have someone pay your mortgage and limit your living expenses. To be upfront, you're not going to find a home run house hack deal. Here is your non-BS practical and realistic advice I'd recommend to follow:

1. Get pre-approved. Once you establish your budget and purchasing power this will help you rule out and include different submarkets of ATL. Some conventional loan products allow as little as 3% down for single-family homes. In the meantime, continue saving religiously, build your credit, limit unnecessary debt, etc. 

2. Connect and work with an investor-focused real estate agent, preferably, someone that mainly works with investors and houses hackers routinely. They know the market and what works and what doesn't. 

3. Analyze deals and submit offers. Analyze the deal as both a house hack and rental after you plan to move out. Many buyers forget to perform the latter. 

4. Close the deal. 

Even though 6 months may seem like a lot of time, it will be here before you know it. If you have any additional questions regarding real estate or the ATL market, feel free to shoot me a text or email for preferred communication (contact info is listed in my bio).